A car has ploughed into a busy outdoor Christmas market in the eastern German city of Magdeburg, killing at least two people and injuring at least 68 others in what authorities believe was an attack.

The driver was arrested shortly after the car barreled into the market at around 7pm, when it was teeming with holiday shoppers looking forward to the weekend.

The suspect is a 50-year-old Saudi doctor who moved to Germany in 2006, Tamara Zieschang, the interior minister for the state of Saxony-Anhalt, said at a news conference.

Emergency services attend an incident at the Christmas market in Magdeburg, Germany (Source: Associated Press)

He has been practising medicine in Bernburg, about 36km south of Magdeburg, she said.

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“As things stand, he is a lone perpetrator, so that as far as we know there is no further danger to the city," Saxony-Anhalt's governor, Reiner Haseloff, told reporters.

Fifteen of the injured were hurt very seriously, according to government officials and the city government’s website.

Haseloff said the two people confirmed to have died were an adult and a toddler, but that he couldn’t rule out further deaths.

Emergency services attend an incident at the Christmas market in Magdeburg (Source: Associated Press)

“But that is speculation now. Every human life that has fallen victim to this attack is a terrible tragedy and one human life too many,” he said.

The suspected attack in Magdeburg, a city of about 240,000 people west of Berlin that is Saxony-Anhalt's capital, came eight years after an Islamic extremist drove a truck into a crowded Christmas market in Berlin, killing 13 people and injuring many others. The attacker was killed days later in a shootout in Italy.

Christmas markets are a huge part of German culture as an annual holiday tradition cherished since the Middle Ages and successfully exported to much of the Western world.

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Emergency services attend an incident at the Christmas market in Magdeburg (Source: Associated Press)

In Berlin alone, more than 100 markets opened late last month and brought the smells of mulled wine, roasted almonds and bratwurst to the capital.

Other markets abound across the country.

German interior minister Nancy Faeser said late last month that there were no concrete indications of a danger to Christmas markets this year, but that it was wise to be vigilant.

Hours after Friday's suspected attack, the ring of sirens clashed with the market’s festive ornaments, stars and leafy garlands.

Emergency services attend an incident at the Christmas market in Magdeburg (Source: Associated Press)

Magdeburg resident Dorin Steffen told German news agency DPA that she was at a concert in a nearby church when she heard the sirens.

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The cacophony was so loud “you had to assume that something terrible had happened.”

She called the attack “a dark day” for the city.

“We are shaking,” Steffen said. “Full of sympathy for the relatives, also in the hope that nothing has happened to our relatives, friends and acquaintances.”

Haseloff called it a catastrophe for the city, state and country, adding that flags would be lowered to half-staff in Saxony-Anhalt and that the federal government planned to do the same.

“It is really one of the worst things one can imagine, particularly in connection with what a Christmas market should bring," the governor said.

In a tweet, German chancellor OIaf Scholz said: “My thoughts are with the victims and their relatives. We stand beside them and beside the people of Magdeburg.”

Magdeburg mayor Simone Borris, who was on the verge of tears, said officials plan to arrange a memorial at the city’s cathedral on Saturday.

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The attack reverberated beyond Magdeburg.

After a soccer match between Bayern Munich and Leipzig, Bayern chief executive Jan-Christian Dreesen asked fans at the club’s stadium to observe a minute of silence.